As the economy picks up steam, Sen. Darrell Steinberg, D-Sacramento, president pro tem of the state Senate, appeared in San Diego last week to tout his proposed legislation to revitalize older neighborhoods.

“Whether we call it redevelopment or economic development, it’s really important how we create these types of projects, how we revitalize communities, how we take blighted areas and make them better,” Steinberg told a San Diego Foundation forum.

The discussion was prompted by last year’s end to the state’s 400 redevelopment agencies — a move done by Gov. Jerry Brown to help plug a big hole in the state budget.

The biggest loser was affordable housing, which was guaranteed 20 percent, or about $40 million, annually from the so-called tax increment generated from San Diego city’s former redevelopment program. Steinberg would up that guarantee to 25 percent.

Tax increment was the amount in property taxes generated from new development and property appreciation set aside for infrastructure, housing and economic development in San Diego’s 14 former redevelopment project areas. And some of that money has been redirected back to school districts to replace state support.

Steinberg said his bill, SB1, which would create new city agencies called “sustainable communities authorities,” with redevelopment-like powers.

But he acknowledged the new setup would generate less money for housing and other projects because school district tax receipts would no longer be available for public improvements.

In San Diego’s case, that would cut overall tax increment collections by about 43 percent and leave affordable housing with about $21.5 million per year if all the former redevelopment zones became community investment areas.

Susan Riggs Tinsky, executive director of the San Diego Housing Federation, which lobbies for affordable housing, said she was heartened to hear that housing would get a higher priority under SB1.

“If there is a silver lining to the loss of redevelopment, we are really forced to think creatively about tools we have right now and think about what tools we could have,” Tinsky said.

The old redevelopment system was tied to eradication of blight, whereas Steinberg’s would target support along public-transit corridors, such as El Cajon Boulevard, University Avenue and the San Diego Trolley’s Orange Line through Logan Heights, Mount Hope, Valencia Park and Encanto.

Steinberg said the governor vetoed last year’s bill because redevelopment agencies were still being wound down. Since the new version includes Brown’s hoped-for high-speed rail stations and corridors, the governor might be more willing to lend his support.

“I can’t guarantee what the governor will do,” Steinberg said. “I can tell you that the waters have calmed a little bit.”

The Senate Government and Finance Committee approved SB1 March 13 and referred it to the Transportation and Housing Committee.

Also at the San Diego Foundation forum, Civic San Diego President Jeff Graham his city-wide agency, which replaced the Centre City Development Corp. that focused on downtown, is looking a number of alternate funding choices, including:

•Public-private investment funds;

•Builder-paid public benefits, such as parkland, in exchange for getting more development rights;

•Investments from immigrants seeking permanent-residency status; and,

•Foundations, grants and tax credits.

“There is no silver bullet that’s going to solve the end of redevelopment and loss of tax-increment financing,” Graham said. “We’re going to have to get used to layering resources as we do with affordable housing and other projects to make it happen.”

SB1 deconstructed

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The Sustainable Communities Investment Authorities bill includes these provisions:

•Creates “sustainable communities investment areas” along transit corridors or around major transit stops; for small walkable communities (one per city); or for clean-energy manufacturing operations.

•Permits tax-increment financing -- setting aside property taxes generated from new development and property appreciation -- only if a city adopts restricted parking rules in transit-priority areas, requires prevailing wages for funded projects in the investment zones and sets a minimum of 20 dwelling units per acre in walkable community projects.

•Requires at least 25 percent of tax increment be set aside for affordable housing.

•Allows state and local pension systems to invest in investment area public infrastructure.

•Authorizes investment area authorities to be set up by a city; a city, county or special district together; or a county for an unincorporated area. A school district may not participate in an authority.